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By Ezra Brook
Carbonite, based in Boston, Massachusetts, had initially planned a $100 million IPO with a pricing range of $15 to $17 – for Aug 9, 2011 – with market capitalization of $384 million at a price range mid-point of $16. However, the company decided to lower its IPO pricing to $10 to $11 yesterday; after the turbulent state of the market. The change will reduce the company’s market capitalization to $240 million, at the low range of $10 a share.
Today, the 11th of August 2011 — two days later than the planned IPO — CARB shares opened at $10.80, then it moved up quickly and stayed up for most of the trading hours, closing at $12.35, which is a gain of 23.5%. Not bad, taking into account the market conditions.
CARB hit a high of $13.40 intra-day and a low of $10.80, which was the opening price. About 1.23 million shares exchanged.
In a conference call with reporters, after the company went public, CARB CEO David Fried, said, “I’m not so concerned about the stock price today. I’m more concerned about what the stock price will be a year or two years from now. The publicity with going public is beneficial for us, but it also gives us a currency for strategic acquisitions.” Friend said that ‘going public is in the best long-term interests of the company, stockholders, and employees’.”
Carbonite is a leading provider on online cloud based backup services. The company has around 1.1 million subscribers scattered across more than 100 countries with over 94% residing in the USA. The company is very popular for the level of automation it brings to backup processes in the cloud. The easy to use GUIs; the security, flexibility and scalability of the service deliver value to customers who are extremely loyal to the company. This is evident by the fact that the customer retention at Carbonite hovers at 96%.
The revenue growth over the last five years (2006-2011) has been very impressive. The first half of 2011 posted earnings show that the company has earned a revenue of $27.2 million. Basic Carbonite services cost $59 per year; $109 for two years and $139 for three years of unlimited storage. Sustainability of this low pricing without capacity restriction has been questioned by many in the industry and skeptic investors in the market, especially after Mozy decided to discontinue its unlimited backup plan back in February 2011. The expectations are that the company will remain unprofitable for the next two to three years as it makes huge investments in marketing and technology and gets ready to exploit future potential of current investments.
The company has around 13 patents applications for technical infrastructure, key usability and design concepts pending.
Investors with around 5% share in stock of Carbonite include Menlo Ventures, Performance Direct Investments, Crosslink Capital and First Plaza Group Trust. For more information on Carbonite’s ownership structure, click on this link.
Carbonite has done a good job in creating online backup and recovery awareness through its advertisements. I believe that the whole industry has benefited from the Carbonite ads. The company revenues have more than doubled every year since 2006. Such growth is very impressive and respectable. Based on the first half 2011 sales of more than 27.2 million, Carbonite is positioned to bring in more than $50 million revenues in 2011, which will be more than double the 2010 revenues. Carbonite continues to spend heavily in advertisements, which might impede the company from becoming profitable sooner.
Carbonite has made an acquisition recently, paying $2 million in cash for Phanfare, which helps the company add new photo sharing features.
Below is Carbonite’s profile as filed at NASDAQ
Disclosure: This is my personal opinion and in no way intended to promote Carbonite. I don’t own any shares of Carbonite. You need to consult your financial advisor before investing in any stock.
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